Securities and Exchange Commission Mid-Year Adjustment to Section 31 Fee Rate – Rate Change Effective 4/1/04


 

March 4, 2004
 

Under Section 31 of the Securities Exchange Act of 1934 (Exchange Act), the Securities and Exchange Commission (Commission or SEC) must make a mid-year rate adjustment to the Section 31 transaction fee rate (Fee Rate Advisory #8 for FY 2004). Effective April 1, 2004, the revised Section 31 transaction fee rate will be reduced to $23.40 per million.

 

The Commission consulted with both the Congressional Budget Office and the Office of Management and Budget about the mid-year adjustment, as required by the Exchange Act. To make its determination, the Commission used market projections based on the most recent increases in dollar volume of securities transactions thus far in fiscal year 2004. The increases in dollar volume and the timing of when the Commission received its fiscal 2004 appropriation both contributed to a mid-year rate that is considerably lower than the current annual rate. A copy of the Commission's order and calculation methodology is available at http://www.sec.gov/.

 

Systems Changes

 

Members should evaluate their systems and make any necessary changes to ensure that, effective April 1, 2004, securities transactions are assessed the revised Section 31 transaction fee. In the event any member has difficulty implementing systems changes by that date, or if you have further questions about this Member Alert, please contact Rob Renner, NASD Director of Accounting Operations, at (240) 386-5303.

 

Calculation of Fees – Rounding

 

In calculating the new fee, members should multiply the aggregate dollar amount of sales of covered securities transacted by the fee rate (.0000234), which will be truncated at the seventh place after the decimal point. The resulting figure should then be truncated at the fifth place after the decimal point and then rounded up to the next cent (if there is any remainder, members should round up).

 

Odd-Lots/OTC Options Exercised

 

For members that are clearing, including self-clearing, firms, attached is a revised SEC Fee Odd Lot & OTC Options Report with new effective dates and additional contact information.